Standing Committee F

[Mr. Joe Benton in the Chair]

Employment Bill

Clause 27 - Practice directions

Philip Hammond: I beg to move amendment No. 41, in page 34, line 20, at end insert—
 '(2A) Where employment tribunal procedure regulations include provisions enabling the President to make directions about the procedure of employment tribunals they shall also include provision requiring the President to consult with such users and representatives of users of the employment tribunals as appear to him to be appropriate before making such directions'.
 The amendment would require that, where employment tribunal procedure regulations include provision to enable the president to make directions about procedure, they should also require the president to consult representatives of users of the tribunal service. I understand that tribunal user groups are established in all tribunal regions in England and Wales, so bodies are available to be consulted. 
 I hope that what I propose is not controversial. In the past couple of years I have been used to dealing with health and social services Bills in Standing Committee. Most, if not all, of those Bills have from the outset included provisions—which are not terribly onerous—requiring the Secretary of State to consult those who appear to him to be relevant, before issuing the orders in question. That approach is at least a gesture towards open government and an attempt to take into account the properly expressed views and interests of those likely to be affected by an order. It goes some way towards dealing with a problem that we have with respect to the practice directions. 
 The principle of practice directions can be discussed on clause stand part. However, the Minister will appreciate that, while the Opposition have a natural concern about secondary legislation, which does not receive the same scrutiny as primary legislation, the practice directions are tertiary legislation. Once the regulation to allow practice directions has been debated here, the directions themselves will not be subjected to parliamentary scrutiny. It is therefore important to ensure that, in making such directions, the president takes account of the legitimate views of user groups and others who will be affected by them. 
 I am prepared to concede that the matter in question can properly be dealt with in regulations. However, once again, the architecture of the Bill forces the Opposition to explore issues by way of an amendment. I hope that the amendment will enable the Minister to provide a categorical assurance that the regulations 
 will include a requirement for the president to undertake consultation before issuing a practice direction.

Alan Johnson: Clause 27 is important to ensure the use of existing best practice throughout the country. In the ruling on Eurobell Holdings plc v. Barker, the employment appeals tribunal stated that it was undesirable for different directions to apply to different employment tribunal regions. At the moment, presidents cannot issue practice directions. The responses to ''Routes to Resolution'' were overwhelmingly in support of giving presidents the power to issue practice directions, to help provide consistency in different tribunal regions.
 Only one of the organisations that responded even mentioned consultation, but I accept that, on some occasions, practice directions will not seek to extend existing best practice and will cover new ground. Sometimes, presidents may think that it is appropriate to consult. However, it is for them to judge, just as it is for employment appeal tribunals, which can issue practice directions, to decide whether to consult. Nothing in clause 27 prohibits consultation, but presidents should not be required to consult on each and every occasion, as amendment No. 41 clearly requires them to do. The regulations will clarify the position, so the amendment should be withdrawn.

Philip Hammond: I am deeply disappointed by the Minister's response. He says that practice directions will not always merely seek to extend best practice. However, it is not obvious that it is unnecessary to consult on practice directions that do seek to extend best practice, and people may not agree on what extends best practice. Subsection (2) of proposed new section 7A explicitly states:
 ''Employment tribunal procedure regulations may, instead of providing for any matter,''-- 
that is, rather than the substance of the matter being included in regulations that will be subject to the, admittedly lame, parliamentary scrutiny procedure for statutory instruments— 
''refer to provision made or to be made about that matter by directions''. 
As I understand subsection (2), we can go from primary legislation to substantive regulation without any further parliamentary scrutiny. That is a serious issue. I anticipated that the Minister would say that he would expect presidents to consult users of tribunals, as a matter of course, before introducing practice directions. It is extraordinary if the Minister envisages that the tribunal president should ever want to make a practice direction without talking to the recognised and established user groups, who represent all parties who use the tribunals. I should have thought that the Minister would readily concede that in principle, even if he does not want to be bound by including a provision to that effect in the Bill. 
 The Minister did not say that, even in principle, he would expect presidents to consult as a matter of course. That is an extraordinary position for a Government who are apparently committed to 
 openness and accountability to take, so I am deeply disappointed by his response. However, looking around me, I am not minded to press the amendment to a Division.

Mark Prisk: Quality is more important than quantity.

Philip Hammond: Indeed, but unfortunately our voting procedure does not recognise that simple truth. I am minded to withdraw the amendment, but I ask the Minister to reflect on what I have said. I genuinely did not believe that my amendment would be controversial and I expected the Minister to deal with it in two minutes by saying that he would, of course, expect presidents routinely to consult recognised user groups, but that it was unnecessary to include such a provision in the Bill. I am alarmed that the Minister seems to suggest that consultation will not be normal practice, and I shall probe the Government again on that issue on Report. I hope that he will consider the logistics of such a consultation procedure with the presidents, and perhaps conclude that the requirement would not be terribly onerous. It would certainly satisfy user groups that have expressed concern about having an opportunity to make their views known on any proposed directive.
 I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Philip Hammond: I revert to the important point of principle raised by the clause. In practice, the directions will be under tertiary legislation and not subject to parliamentary scrutiny. That is bad enough, but proposed new section 7A(2) of the Employment Tribunals Act 1996 appears to enable the practice directions to be used as a substitute for regulations, and thus to allow substantive procedural regulation to be imposed without the opportunity for scrutiny in the House or another place.
 The regulations may provide that practice directions rather than the regulations themselves substantively deal with certain matters. If so, we need to press the Minister to tell us what he intends to delegate to the presidents in that way. We shall definitely not have an opportunity to scrutinise those matters, as statutory instruments on them will not come before the House. We could discuss those matters now if he would let us know why proposed new subsection (2) was needed and what subjects he wanted to deal with under it.

Alan Johnson: I hope that I can set the hon. Gentleman's mind to rest. He raises an important point that I will consider further. However, the provision was supported widely. We do not intend to interfere in any way with how presidents decide that they can ensure best practice throughout their jurisdiction. There is one president for Scotland, and one for England and Wales.
 The explanatory notes give a couple of examples of what we are thinking of. According to them, 
''rule 4 of the main Employment Tribunals Rules of Procedure'' 
allows discretion and 
''says that a tribunal may issue directions''. 
Rule 17 states that tribunals 
''may extend certain time limits''. 
It is our old friend ''may'' rather than ''shall''. Discretion is allowed. The explanatory notes also state that, in the case of Eurobell Holdings plc v. Barker, the employment appeals tribunal said that it was undesirable that the employment tribunals service 
 in Birmingham, for instance, should take that discretion, issue a set of directions and set a precedent in an area that was not followed by the employment tribunals service in London. We are considering such problems. 
 I shall consider the point about tertiary legislation further, but we have nothing to fear. In the case of Eurobell Holdings plc v. Barker, the employment appeals tribunal said, according to the explanatory notes, 
''that it was undesirable that employment tribunals should adopt different practices...in different regions''. 
Unlike the third president—the employment appeals tribunal president—employment tribunal presidents are not currently allowed to issue practice directions, but the Bill deals with that inconsistency. 
 The provisions are sensible. On occasion, presidents will consult user groups. Although I shall consider the matter further on Report, I hesitate to say that I believe it right in principle for them to consult in such circumstances. We would not want to interfere in an employment appeals tribunal process that worked perfectly well. We see the need for the provision—indeed, an EAT ruling suggested it. Everyone who responded to the consultation supported it and only one organisation mentioned consultation. The hon. Gentleman raised an important point, and it is proper for him to do so, but after the explanations that I have given him he should feel reasonably relaxed that no huge issue of principle is involved. However, I will consider the points that he made further on Report.

Philip Hammond: I am grateful to the Minister for addressing the issues that were raised in the last short debate about consultation, but will he confirm that it is not envisaged that the scope of delegating power to the discretion of the president through directions will be any wider in relation to employment tribunals by virtue of proposed new subsection (2) than the areas currently covered by the directions in the employment appeals tribunal? Proposed new subsection (2) could mean—if it were taken to its most ludicrous extreme—that the employment tribunal procedure regulations said simply that the president of the tribunal may make directions as to procedure. If that is to be the case, we need to know.

Alan Johnson: I can give the assurance that the hon. Gentleman seeks on that point. The other important point is that the regulations will empower tribunal
 presidents to issue practice directions, which will be the subject of debate. The affirmative procedure will be the proper procedure for that.

Philip Hammond: All that the affirmative procedure means is that the Opposition do not have to keep their eyes open as we would otherwise. We will still have only 90 minutes to debate the provisions. Although we will not be dependent on the Government's largesse in agreeing to the debate, the period for scrutiny will be short.
 Let us be explicit. Is the Minister saying that the area delegated to directions made by the president under employment tribunal procedure regulations will be no wider than the area delegated to directions under existing employment appeals tribunal procedures?

Alan Johnson: Yes.

Philip Hammond: I am grateful to the Minister.
 Question put and agreed to. 
 Clause 27 ordered to stand part of the Bill.

Clause 28 - Pre-hearing reviews

Philip Hammond: I beg to move amendment No. 42, in page 34, line 31, at end add—
 '(2) In section 9(1) of the Employment Tribunals Act 1996, after paragraph (a) there is inserted—
''(aa) for enabling the Tribunal to strike out any case which is found by a review conducted under paragraph (a) above to be without merit and where in the opinion of the Tribunal, no purpose would be served in allowing the case to be determined at a hearing, and''.'.
 The clause removes the expression ''preliminary'' from the reference to the review procedure in existing legislation. The explanatory notes state that the purpose is to be crystal clear about the fact that the review procedure can be the end of the line in some cases and does not always have to be preliminary to a full hearing. The history and examples quoted by various organisations suggest that that is a sensible route to take. 
 The explanatory notes make it clear that the pre-hearing review as a result of the changes introduced by the Bill can lead to the dismissal or striking-out of a case. That may be crystal clear to parliamentary draftsmen but to anyone else reading the Bill, it would be as clear as mud. The clause inserts powers 
''for authorising an employment tribunal to carry out a review of any proceedings before it at any time before a hearing held for the purpose of determining them''. 
It says nothing about striking out or dismissing a case at that review. 
 The amendment would make the purpose of the change to section 9 of the Employment Tribunals Act 1996 crystal clear by stating that there will be a power to enable the tribunal to strike out a case and clarifying the grounds on which it can do so. This is a probing amendment in the sense that I have set out my view of what those grounds should be. If the Minister's view is different, I should like to hear it. If he will not accept 
 the amendment, I should like him to clarify how the grounds will be specified and how the provision to strike out a case will be written into the Bill. 
 The amendment states that a case that the review finds to be without merit could be struck out, where 
''in the opinion of the Tribunal, no purpose would be served in allowing the case to be determined at a hearing''.

Brian Cotter: If I may anticipate the hon. Gentleman, would the pre-hearing review not need to have access to all the evidence and papers before turning a case down along the lines in the amendment?

Philip Hammond: The hon. Gentleman is right. Perhaps he should not anticipate, because I was not going to mention that point and we are now all looking forward to him making a short speech about it when I sit down. His point does not relate to the thrust of the amendment, but it is interesting. It takes us back to an aspect of the conciliation issue that we touched on at our previous sitting, which you will be disappointed to have missed, Mr. Benton—[Interruption.] I see that not all Labour Members agree, although I have found our proceedings riveting. There may be a reason for that, but we can discuss it another time.
 We discussed the extent to which documents needed to be discovered at the beginning of the conciliation process. The hon. Member for Weston-super-Mare (Brian Cotter) mentioned discovery in the context of a pre-hearing review, and he will want to explore that further. 
 The amendment may not be perfectly drafted, but will the Minister confirm that it raises an issue with which we must deal? Will he confirm that there will be a power to strike out a case on review and tell us how that power will be delivered? Will it come through regulations or does it exist elsewhere, in which case I have simply missed it? Will the Minister also give us an estimation of the basis for striking out a case? Will regulations set out the type of cases that can be struck out or will the tribunal be left with a large degree of discretion? 
 To give the Committee an understanding of the real issue, will the Minister tell us what estimates he has made of the likely number of cases that will be struck out as a result of pre-hearing reviews? Does he expect 5 per cent., 10 per cent. or 20 per cent. of cases to be struck out? The Committee would see the matter quite differently if the figure was 0.25 per cent., not 25 per cent. 
 I look forward to the Minister's comments and to returning to some of the issues once we have had the benefit of his words of wisdom.

Brian Cotter: I shall take the opportunity presented to me by the hon. Member for Runnymede and Weybridge (Mr. Hammond). I shall make the point again, because although the Minister will respond, it was directed at the hon. Gentleman. The hon. Gentleman has proposed a way to make it clear that if a case is found to be without merit, it could be ruled out. The concern is that it would be unsatisfactory if the pre-hearing did not have full access to the papers and the case was ruled out.

Philip Hammond: Do the hon. Gentleman and his party support the principle that cases without merit should be capable of being struck out at a pre-hearing? I accept that he wants to ensure that proper information is available, but subject to the that caveat, does he support the principle of striking out cases that have no merit?

Brian Cotter: It is an area of concern that they should be struck out. I am not absolutely happy that the tribunal would have all the evidence at that juncture.

Alan Johnson: I shall try to offer the hon. Member for Runnymede and Weybridge the words of wisdom that he asked for. We intend to amend the employment tribunal regulations to include a strike-out power at the pre-hearing stage. At the moment, the tribunal cannot do that because section 9(1)(a) of the Employment Tribunals Act 1996 implies that pre-hearing reviews are preliminary considerations. That term suggests that they must be followed by a full hearing, no matter what the circumstances.
 Misconceived applications—in answer to the hon. Gentleman's question, that is application that have no reasonable prospect of success—can be struck out at the pre-hearing stage. Clause 28 removes the implication that that cannot happen because the pre-hearing is a preliminary consideration and that it must be followed by a full hearing. That is the important element of the provision. The hon. Gentleman also asked whether we envisaged the power being used to a huge degree. We do not envisage it being used other than in extreme cases. 
 We should not forget that tribunals still have the power to order a deposit. The deposit used to be £150, but we increased it in July to £500 by statutory instrument. Tribunals can still insist on a deposit, but the main reason we do not expect the power to be used frequently is that touched on by the hon. Member for Weston-super-Mare. Pre-hearings do not take evidence, so people are not able to exchange all details of the case. Although it will be a matter for regulation, it would be unwise to suggest that giving employment tribunals the right to strike out such cases at pre-hearings would mean that they would use it to a huge degree.

Philip Hammond: Presumably the Minister has identified a certain percentage of cases where deposits are required, but that is an inadequate response in cases that are so futile that they ought to be struck out. What percentage of cases that require deposits would he envisage being struck out under the new powers?

Alan Johnson: I cannot give a percentage because there are so few cases. Of the 299 pre-hearing reviews held during 2000-01, none of which were struck out because the power did not then exist, only one that was won by the applicant ended up before an employment tribunal. The vast majority were withdrawn or settled before the hearing. We are not talking about huge percentages. We are talking about a tidying-up amendment, because we believe that employment tribunals should have the power to strike out cases that
 have no reasonable prospect of success, as well as having the power to order a deposit to be paid before a case goes to a hearing.

Philip Hammond: I am slightly mystified. I presume that in proposing an amendment the Government are responding to a mischief that they have identified. The Minister seems to be telling us that he wants to give himself an additional power, but when asked what he will do with that power, he replies that there is no problem to address. I am therefore mystified about the motive for introducing the power.

Alan Johnson: The motive is that many of those 299 cases, although not the majority—the majority will have been withdrawn on the basis that a deposit was ordered and the people involved decided not to take the case any further—will be struck out before the hearing.
 The number of employment tribunal applications has trebled in the past 10 years. There is some tidying up to do, and we might as well address an anomaly at the same time. This amendment to the 1996 Act might help if the number of cases continues to rise. It would be quite wrong of us to create a system wherein cases could be struck out at pre-hearing reviews, which do not hear evidence, when the judiciary think that there is an arguable case that should not be struck out at a pre-hearing. To do so would be to deny people justice. Furthermore, if a case is struck out at the pre-hearing stage, the applicant or respondent will have the right of appeal to an EAT. That might answer some of the concerns that were voiced on Second Reading and by my hon. Friends.

Rob Marris: The Minister's use of the word ''respondent'' raises another issue. Does that mean that the regulations will provide a two-way street such that the cases of respondents as well as applicants can be struck out for having no reasonable prospect of success, as is currently possible under the civil procedure rules?

Alan Johnson: That important point needs to be clarified. My hon. Friend is correct: the procedure would apply to both respondents and applicants.

Mark Prisk: It is not clear whether the Minister is saying that the system of demanding a deposit is not operating sufficiently well, or that it is but the deposit is not high enough so the power to strike out cases is required.

Alan Johnson: We increased the deposit from £150 to £500 only in July, so it is too early to ascertain what effect that is having on the number of cases that go forward. It is ludicrous to have a system in which it can be decided at a pre-hearing that a case has no reasonable prospect of success, but the tribunal nevertheless has to allow a full hearing to take place, although it can insist on a deposit. It should have the power to strike out the case at that stage if it believes that there is so little chance of success that it is not
 appropriate even that a deposit should be paid and the case heard. That it does not is an anomaly in the system.
 We are not making a radical change. We are tidying up employment tribunal procedures. It is questionable whether there was ever an intention to prevent employment tribunals from striking out cases at the pre-hearing stage. However, the reference in the Bill to preliminary consideration implies that there must be a full hearing, irrespective of how unreasonable and misconceived the case is. We are trying to tidy up that anomaly.

Philip Hammond: I do not wish to be pedantic, but the Minister made a significant slip of the tongue. He spoke about striking out a case that has so little prospect of success that the tribunal does not think it reasonable to allow it to proceed. I assume that he meant to say that it would be reasonable to strike out where there is no prospect of success.

Alan Johnson: I am happy to indulge in semantics—the hon. Gentleman is right and I apologise for my slip of the tongue.
 While I am apologising I may as well mention a previous slip of the tongue. I am pleased that the hon. Gentleman said that there was very little difference between the affirmative and negative procedures, because I was thinking that the Committee had moved on to part 3. We are still discussing part 2, which is all dealt with under the negative procedure. I know that he will not worry about that, given that he perceives very little difference between the two, but it is important that I set the record straight. 
 The power to strike out exists at other stages in employment tribunal proceedings, but not at the pre-hearing stage. That is another aspect of the anomaly. It is important to stress that it will be appropriate to strike out cases in which the facts have already been either subject to litigation or settled, and the applicant has no fresh or different evidence but insists on pursuing the case. It is appropriate to strike out cases in which the facts are not in dispute, but the interpretation laid upon them is wrong. It is also appropriate to do so in cases in which a party's application is not itself sufficient to lead to a successful outcome and that party has stated at the pre-hearing review that no further evidence or witnesses will be called. 
 Those are examples of where tribunals could reasonably strike out the case. The clause will remove the anomaly. Amendment No. 42, which I think is a probing amendment, is unnecessary in that respect. I assure the hon. Gentleman that the strike-out provision will be in the regulations and I hope that on that basis he will withdraw the amendment.

Philip Hammond: The Minister has given the assurance I sought. It is still not entirely clear to me how prescriptive the regulations will be on the question of when a case should be struck out and how much discretion the tribunal will have, but I suspect
 that that might more appropriately be debated when the regulations have been published. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Philip Hammond: It is right that it should be possible to strike out or otherwise deal with vexatious or trivial cases in a way that does not impose huge burdens on either the tribunal system or on a respondent who is forced to prepare a proper case against an application that may be entirely without merit. We have heard a lot during our deliberations about the growth of the compensation culture—although I do not think that anybody apart from me has used that term. The idea that whatever happens, someone is always responsible and must compensate for it lies behind many of the problems.
 To many people, bringing a case before the tribunal system appears at times to be an opportunity with a potential upside, but little potential downside—a lottery ticket for anyone who feels that he has a grievance to exploit. That is not to denigrate the large number of people who have genuine cases founded on real issues that need to be dealt with, but I do not think that the Minister is trying to deal with such people. The Bill is aimed at those at the margin who are abusing the process. The proposal is sensible, but the Minister's remarks do not make clear to what extent it will be used. I should have expected there to be a significant number of cases that could be struck out. 
 Let me make a suggestion to the Minister. He recently raised the maximum deposit from £150 to £500—no doubt that caused consternation in certain quarters. If the only weapon is a deposit of £150, to raise it to £500 is a dramatic change in the structure of the playing field. However, if another weapon—that of striking the case out altogether, so that the applicant and the respondent have no opportunity to put their case—is available, I question whether placing a maximum limit of £500 on the deposit makes sense. 
 If the tribunal holds the nuclear option of striking out the case altogether, should it not have a wider range of intermediate options such as higher deposits—or even unlimited deposits, at the tribunal's discretion? In such circumstances the tribunal might think, ''We could justify striking out this case, but we will instead set a high deposit''. If a company is involved and the case appears to be 99 per cent. cut and dried but a scintilla of doubt remains, should not the tribunal have the capability to say, ''We think this case could very well be struck out, but if the respondent is prepared to put up a substantial deposit because he believes that he has a case to present, let us allow him to do so''? I understand why the increase was limited to £500 maximum when a deposit was the only remedy, but I invite the Minister to ponder whether in a world where strike-out is a remedy, a higher cap on the deposit or an unlimited deposit at the discretion of the tribunal might be a solution.

Rob Marris: The hon. Gentleman's suggestion is interesting but potentially counterproductive. I can envisage tribunals setting the larger deposit he suggests rather than striking out cases that should be struck out. The case would then go to a hearing and the applicant or respondent might lose that deposit. It is the nature of things that applicants and, perhaps to a lesser extent, respondents go to a tribunal only once. They might learn lessons, but in doing so they will clog up the tribunal system.

Philip Hammond: It might be counterproductive, but the clogging of the tribunal system is linked to resources, so the question of who gets the deposit might become interesting. If the tribunal system is reimbursed for its time and trouble, perhaps no harm is done. I make the suggestion because I cannot see the logic of having—if I may use a military analogy—on the one hand the nuclear bomb of strike-out and on the other hand a 1895 Lee Enfield self-loading rifle, with nothing in between. I wonder whether the Minister thinks a better-graded range of options should be available to the tribunal.

Alan Johnson: I am pleased that the hon. Gentleman recognises the value of clause 28. My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) is right. It is an enlightening statistics that the number of deposits ordered last year before the £500 limit came into effect—we are therefore talking about the £150 deposit—was 234, of which 48 were paid. On being told that they could take the case forward but that there was a deposit of £150, the majority of other applicants did not make the deposit. That statistic does not suggest that there is a problem, now that the limit has been increased to £500.
 The hon. Member for Runnymede and Weybridge raises the interesting question of whether in the new situation where we have the nuclear option, we should do something else with the deposit. That matter would best be considered by the employment tribunal system taskforce, where reference can be made to precedence, users, representatives of small businesses, the TUC, the CBI and the Advisory, Conciliation and Arbitration Service. We have asked the taskforce to look at the good operation of the procedures, including the effect of the new procedures. I do not think we need to explore that idea; it is on the record and the taskforce is best equipped to consider it. 
 Question put and agreed to. 
 Clause 28 ordered to stand part of the Bill.

Clause 29 - Statutory dispute resolution procedures

Philip Hammond: I beg to move amendment No. 79, in page 35, line 9, leave out subsection (b).

Joe Benton: With this it will be convenient to take the following amendments: No. 50, in page 35, line 16, at end insert—
'(c) make provision for the Standard Procedures to apply in classes of cases specified for that purpose in the order and for the Modified Procedures to apply in classes of cases specified for that purpose in the order.'.
 No. 51, in page 35, line 16, at end insert— 
'(c) make provision for the Schedule not to apply to certain classes of cases'.

Philip Hammond: Clause 29 provides for schedule 2 to have effect and subsection (2) gives the Secretary of State certain powers in relation to the way it takes effect. Schedule 2 provides the minimum statutory dispute resolution procedure. One of the abilities that the Secretary of State is given in subsection (2) is, in effect, to extend the application of the statutory dispute resolution procedure beyond employees.
 That brings us to the now familiar debate about workers versus employees, which by the end of our proceedings will no doubt have become even more familiar. The subsection uses the rather bizarre means that were described in one of the briefings that I have received as ''impenetrable''. It provides, as only legislation can provide, that for the purpose of the Bill a person who is not an employee can be an employee and the person who is not his employer can be his employer. We move into an Alice in Wonderland world in which people are what they are not for the purposes of legislation. 
 It is not a small matter to treat someone as an employee when he is not, or to treat someone as a person's employer when he is not. I expect that other hon. Members will comment on the broader issues. I simply want to ask the Minister what classes of non-employees he intends to make employees for these purposes. Does he want to extend the scope of the clause to all workers? The term ''worker'' is perfectly well defined in law and we know what it means: we have had these debates before and we have legislation that refers to workers. If he is going to use the power to apply the statutory dispute resolution procedure to workers rather than to employees, and to the people for whom they work rather than to employers, he should have the courage of his convictions and say so now. 
 It is disingenuous to produce a Bill that refers to a procedure applying to employees and employers and that contains a clause that allows the Secretary of State to redefine the terms ''employee'' and ''employer'' so that they include people who are not employees and employers. If the Minister intends to use the power only at the margin to deal with hard cases or specific exceptions, we must understand precisely what he has in mind. If he intends to use it on a much broader scale to change the fundamental effect of the clause, we need to know that now, not later. 
 All of us as non-employee workers and Members of Parliament would like to know whether we will be caught within the scope of the clause. Many others who are not employees will also be interested to know that. To be honest, even more people who are not employers might be interested to know whether, for example, contractors to them will be brought within the remit of the statutory dispute resolution procedure. That would quite a startling change if it were to happen.
 When we consider schedule 2, procedural questions may be raised about how the steps it describes would be carried out. We need to exercise our minds about the types of people who might be covered by any extension and how the procedure would deal with them. The Minister should—in the words of a trade union leader whom I quoted earlier—come clean about what he intends to do. If he intends to apply the procedure to workers rather than employees, he should use the word ''worker'' in the Bill.

Tony Lloyd: I am delighted to hear the well-argued case for extending the scope of the schedule made by the hon. Member for Runnymede and Weybridge. We are right behind him. That statement—I will not say U-turn—on behalf of the official Opposition is welcome. He has come clean and I congratulate him.

Philip Hammond: If I thought that the hon. Member for Manchester, Central (Mr. Lloyd) was right behind me, I would be exceedingly nervous. I have not made a case for extending the definition in the clause to workers. I have made a case for honesty in legislation and for the Government to come clean. It would be sneaky of the Minister to use the term ''employee'' and then redefine the word so that it incorporated a group of people who are not employees. That is not how legislation should be produced. I look forward to hearing the hon. Gentleman's contribution to the debate.
 Amendment No. 50 deals with cases in which the standard procedure or the modified procedure are used. Schedule 2 contains a standard and a modified procedure for dispute and dismissal proceedings and grievances. It is not clear in the legislation—as opposed to the TUC brief, which may be authoritative but does not have the status of legislation—when one procedure or the other should be applied. Given the warnings that I issued to the Committee, I should be more careful, but I shall risk quoting the Law Society brief: 
 ''The circumstances in which the Modified Dismissal and Disciplinary Procedure will apply are not specified in the Bill and this should be clarified. The government's response to Routes to Resolution suggests that it will apply in cases of gross misconduct. If this is the case then it is thoroughly misconceived. It mistakes what should be an exception for a very limited class of dismissals for gross misconduct for a general rule for all such cases. There will be cases in which it might be appropriate for an employer to dismiss without holding a hearing such as violence by the employee. But this will not be the case in the overwhelming majority of gross misconduct cases. In many cases the reverse will be the case—the very severity of the sanction of summary dismissal will require higher standards of procedural fairness before action is taken. 
 Again, the circumstances in which the Modified Grievance Procedure will apply are not clarified in the Bill and should be. The Government's response to Routes to Resolution suggests it should apply where the person raising the grievance no longer works for the employer.'' 
Those are important issues. Other bodies have expressed other concerns, but the Minister should place on record when the modified procedure will apply. Members of the Committee may then wish to probe the effect of that.
 Amendment No. 51—perhaps slightly provocatively—provides a power for the Secretary of State by order to make provision for the statutory dispute resolution procedure not to apply in certain cases. I note that there is a power in subsection (2)(a) to amend schedule 2 which would enable the Minister to apply or disapply it to any classes or groups. The purpose of amendment No. 51 is to probe whether he intends to exclude from the provisions of clause 29 either any class of employees or employer—the Crown, for example—or any class of application or jurisdiction. There will be more to say about all those matters after we have heard from the Minister.

Alan Johnson: Let me start, as the hon. Member for Runnymede and Weybridge did, with amendment No. 79,which deletes subsection (2)(b). The statutory procedures currently refer to the ''employee''. As such, they do not apply to workers who are non-employees. The subsection gives the Secretary of State the power to issue an order that will extend the application of the statutory procedures to non-employees. On Second Reading, she announced that she would begin reviewing the law on employment status early next year. The Employment Relations Act 1999 says that the confusing distinction—generally, only decided by employment tribunals—should be reviewed.
 The review will examine why certain parts of employment law apply to employees only, whereas other parts apply to the broader category of worker; sometimes there is no obvious reason for such a distinction. The review will give us an opportunity to consider the issue in its entirety. The hon. Gentleman asked me to come clean; I am coming clean about the review. The House has agreed to legislation that states that there should be a review. 
 The review could make recommendations about the application of the statutory procedures, or it could conclude that there should be no recommendations. As the Minister, I have no views at this stage. However, if it decides that the category of employee should be widened to include workers, it makes sense to retain flexibility in the Bill to cater for that situation.

Philip Hammond: I understand the logic of what the Minister said, but I disagree with his conclusion. If the upshot of the review is a decision that the term ''employee'' should be replaced with ''worker'' in all employment legislation, legislation will be needed to make that change in a whole raft of different statutes. There is no need to include a specific power in the Bill to make the change by order, because more general legislation will be needed if that is the review's conclusion. Independent of the review, does the Minister plan to make any order that would make someone who is not an employee subject to schedule 2?

Alan Johnson: We are setting out a procedure for people to pursue discipline and grievance cases in every workplace. Schedule 3 sets out what the grievance and discipline subsections may cover. Some cover workers, and others employees. Someone could be pursuing a case through the statutory three-step procedure, which currently applies to employees,
 about a grievance that applies to workers. They would fall outside the statutory three-step procedure, which is why we must have the order-making power.
 To give an example, the right to be accompanied at discipline and grievance hearings applies to workers, as does the national minimum wage. We have framed the legislation in accordance with all the employment tribunal legislation for employees, who are those who have a contract of employment. This is a murky area. The order-making power is designed so that, if the review recommends it and we decide to extend ''employees'' to cover ''workers'', we do not have to make a different provision on who can pursue grievance and discipline cases through the three-step basic procedure.

Philip Hammond: I do not agree with the logic of the Minister's position. Is he saying that no order will be made under subsection (2)(b) until the review is completed?

Alan Johnson: Yes, I am. The clause is focused on a review that will commence early next year.
 Amendment No. 50 concerns the application of the standard and modified procedure, and the hon. Member for Runnymede and Weybridge raised pertinent questions about how we intend to deal with them. It is important that I take a little time to explain this. Schedule 2 contains four statutory procedures. Two deal with dismissal and discipline matters, and two with grievances. Within each pair of procedures, there is a standard three-step procedure and a modified two-step procedure. We recognise that grievance and disciplinary issues come in all shapes and sizes. One set of minimum steps may not fit all circumstances, which is why there is a need to set out two types of procedure. The modified procedures are shorter and reduce the need to meet or, in the case of grievances, cut out the need to meet altogether. 
 The schedule does not specify in which cases the standard or modified procedure acts as the minimum. That will be set out by the regulations under clauses 30 and 31. The hon. Gentleman is right, and it would help the Committee if I explained Government thinking on the circumstances in which the two types of procedure will apply. 
 With grievances, we feel that the modified procedure should apply to former employees. Cases, most notably for constructive dismissal, are often taken after people have left their employment. It is impractical to insist that people in that group should return to their former place of work to discuss the issues in person. We must also recognise the fact that both parties will feel less need to invest time in dealing with grievances after the employment relationship has ended. For them, an exchange of correspondence should be sufficient as a minimum. That is the two-step procedure. 
 On dismissal procedures, the modified two-step procedure comes into play in dealing with the special case of instant, summary dismissal resulting from 
 extreme cases of gross misconduct. The circumstances may involve violence or serious criminal wrongdoing and will require an urgent response. The question at issue will be the fairness of the decision to dismiss. Reflecting that fact, the modified procedure provides for an appeal meeting to take place at the request of the employee concerned to review the decision. As I said, the regulations made under clauses 30 and 31 will define the circumstances in which the two sets of procedures will apply. The powers are contained in subsections 30(3) and 31(5)(a). 
 The hon. Member for Runnymede and Weybridge talked about impenetrable language. All of us who have to grapple with Bills would sympathise with that, but the powers are clearly set out. There is no need to use the order-making power in clause 29 for that purpose and the amendment is therefore unnecessary. 
 Amendment No. 51 deals with circumstances in which an employer or employee should not be obliged to follow the statutory procedures. Again, it is important to set out our thinking on that. The statutory procedures merely set out a minimum, and the schedule should therefore be seen as setting out the core elements of procedures that should be applicable in all or nearly all circumstances—I say ''nearly all'' because there will be rare cases in which it is inappropriate for parties to use even those minimum procedures. For example, it might be unreasonable to expect people to meet face-to-face in cases where a manager has assaulted or otherwise seriously harmed the employee—or vice versa, for that matter, since the exemption could work in the opposite direction, where the employee has acted violently towards the manager. 
 Exemptions might apply in other areas and we do not want to create unnecessary duplication of procedures. If an issue has been raised as a collective grievance, we see no reason why we should force parties to raise individual grievances on the same issues, such as in a sex discrimination case where a group of employees share a grievance about the employer's policy towards training or promotion, which has been taken up by their union as a collective grievance. In such circumstances, it would be more efficient to deal with the linked grievances collectively. In such cases, we would not want to require individuals to use the statutory procedure to bring separate cases. 
 We intend to set out special exemptions in regulations, again using the regulation-making powers in clauses 30 and 31 for that purpose. There is therefore no need to use the order-making power in clause 29, as the amendment seeks to do. All the orders and regulations in the clauses are subject to affirmative scrutiny. I am sure that no correction on that will be forthcoming; this time, I have the right part of the Bill. I hope that the hon. Gentleman will, in the light of my explanation, withdraw his amendment.

Tony Lloyd: I hesitated about whether I should follow the hon. Member for Runnymede and Weybridge in discussing workers and employees because it might be more appropriate to do so at another stage, but it is an important debate. The purpose of the clause, and of schedule 2, is to provide a regime under which disciplinary and grievance
 procedures can go ahead. The definition of employee and employer is narrow and restrictive under the present law. A broader definition is used in other legislation, such as on the minimum wage.
 My hon. Friend the Minister gave a commitment to the hon. Member for Runnymede and Weybridge on timing, stating that he does not intend to use subsection (2) before the review is completed. That commitment has been given to the Committee and is now in the public domain. All of us recognise that those who fall outside the definition of an employee are often the most marginalised people in the work force—although other non-employees can be among the best paid and best protected. There is a huge range of conditions among workers who fall outside the formal definition of being employed. However, those who are entitled to only minimum levels of protection are among the most marginalised people in the workplace. 
 I hope that hon. Members on both sides of the Committee agree with that point. When the hon. Gentleman winds up, perhaps he will say whether he accepts that there is a need to consider carefully whether we have adequate disciplinary and grievance procedures for those who will not be covered if my hon. Friend does not at some point use the subsection.

Philip Hammond: I am grateful to the Minister for clarifying the issues raised by amendments Nos. 50 and 51. That was helpful, but he did not address the point raised by the Law Society. I deliberately quoted its brief, rather than paraphrasing it, because I wanted to put the Law Society's view in the forum of the Committee in the hope that the Minister would respond. I was not necessarily endorsing its view, but I quoted it in the pursuit of knowledge. The issue is still dangling and needs to be addressed.
 I was interested in what the hon. Member for Manchester, Central said about amendment No. 79, and I was pleased that he raised a concern that Conservative Members have had for some time. There is a myth that everyone who is a worker but not an employee is part of the downtrodden and oppressed. I could give examples of people who fall within the definition of worker and are not employees who are far from downtrodden and oppressed, as the hon. Gentleman made clear. 
 In an increasingly flexible and fast-moving economy, there will be people who, for their own interests and those of the companies for which they work, wish not to be employees. Admittedly, the Paymaster General recently made the attraction of not being an employee somewhat less than it was for a number of those people. If we are going down the route of reviewing the distinction between worker and employee, I agree with the hon. Member for Manchester, Central that there needs to be a clear distinction between people who, according to any reasonable interpretation, have the character of employees but have been excluded from that definition by subterfuge, and people who are genuinely not employees. 
 The National Minimum Wage Act 1998 uses a definition of worker. Although interesting philosophically, the issue is not particularly important 
 in practice, because by definition those highly paid people who are not employees but are workers will not be caught by the minimum wage. As I recall, we had various interesting discussions about whether people such as computer programmers were covered by the minimum wage, which will always be of purely academic interest unless the supply and demand balance in the market changes dramatically. 
 When we consider employment law more generally, however, that point will become more important. My colleagues and I resist the temptation offered by some Government Members to go with the broader definition of worker for everything. However, I think that I can safely say that in doing so, we are not seeking to defend those who artificially exclude people from the protections of the status of employee by subterfuge that the Inland Revenue should be seeking to unravel.

Alan Johnson: IR35.

Philip Hammond: I am sure that you would not welcome a broad debate on IR35, Mr. Benton, but it is massively over-simplifying matters to suggest that that debate is only about people trying to avoid tax.
 Our concern is primarily to avoid creating sclerosis in a fast-moving economy in which sectors are changing and evolving quickly, and where employers need to engage the services of highly skilled individuals in a flexible way but, for all sorts of legitimate reasons, may not be able to burden themselves with the continuing obligations of employment imposed by the full panoply of employment protection laws. 
 One would hope and expect that those individuals would be suitably remunerated for not having the kind of protections and security that someone with employee status would have. That concern with maintaining flexibility at the cutting edge of the economy drives Opposition Members' arguments.

Tony Lloyd: I am tempted to ask whether the debate on the minimum wage was academic, as the hon. Member for Runnymede and Weybridge said. I freely confess that I did not sit through consideration of the Bill in Committee, but I am well aware that tortuous debates took place. I could ask whether that was a valuable use of parliamentary time, but let us move beyond that.
 The Opposition are often characterised as being hostile to those in the work force, whether they are called employees or workers, as they seek to offer levels of protection to those in an employment role. I do not want to get involved in the legal definition of ''employment role''. We are making progress this morning, and it is helpful to place that on the record. 
 I concede that there is an argument about how we maintain flexibility in the work force and what is the right balance. In what circumstances would the hon. Gentleman consider it right and proper for someone, who by all reasonable definitions has an employment relationship with someone who seems to be an employer, to buy access to adequate disciplinary and grievance procedures? That is a worrying issue. Disciplinary and grievance structures are fundamental 
 to the workplace, as is the right to protection against abuse, whether someone is well paid or badly paid, flexible or inflexible.

Philip Hammond: The hon. Gentleman makes an interesting point. I have no doubt that we will have the opportunity to debate it in some depth. One would expect a self-employed contractor—for example, an information technology specialist—to have a contract that gave him the protection that he needed and that defined his obligations. That contract would not be a contract of employment, but would give him appropriate remedies. Those remedies would not be available through an employment tribunal, unless the Minister were to use the powers under discussion to broaden dramatically the scope of the definition of employee, but they would be available to him through the usual operation of contract law.
 Opposition Members may not have argued the case in the past, but we have reached a consensus that where the contract is a contract of employment, it is proper for the general law to underpin the standards and procedures that will be followed in that relationship. In other words, there is a broad acceptance that statute law should intervene and override the contract between the employee and the employer. The Bill also implies something that is defined in a statute into the terms of a private contract between employer and employee. I hope that we will not start implying all sorts of general law into the terms of other types of contracts. 
 I am not a lawyer, and I stand to be shot down, but my perception is that where our continental colleagues have gone wrong is in the introduction, through the commercial codes that many European countries have as part of their civil law, of certain implied conditions and rights into contracts that are in this country freely negotiated between parties—for example, by the supplier of a specialised service to someone who wishes to contract that service. I have worked in Germany, and on one occasion benefited from the fact that the German commercial code in civil law gave me rights that I had not negotiated in my contract, but I do not think it is a helpful route to follow. 
 I should be happy to have a debate with the hon. Member for Manchester, Central about where the boundary should be between employee-employer relationships that are properly regulated by statute, and relationships that should not be invaded by statutory interference in terms of the right to enter into a private contract bargain. I suspect from the tone of our exchanges this morning that that debate might not be as acrimonious and adversarial as some might expect.

Tony Lloyd: Let us put it to the test, as this is a good time to have that part of that debate. Most people would understand intellectually what the hon. Gentleman said. I suppose that his defence of amendment No. 79, which I accept is a probing amendment, would be that it is an objection in
 principle to widening arbitrarily the scope of the law, not necessarily specifically about schedule 2 and grievance and disciplinary proceedings.
 The hon. Gentleman makes an important statement on behalf of the Opposition in the reasonable tone that he has used throughout our proceedings. Is he saying specifically that he would accept—this is the nub—that a minimum grievance in disciplinary procedure should be there for all people in the workplace who have something that looks like an employee-employer relationship, whether that is defined by law or otherwise? Should that be one of the minimum basic standards? That is not a trick question, and the hon. Gentleman may want to reflect on it and answer it on Third Reading. It would be an important part of progress because my experience is that Conservative Governments were not of that benign view. There was a concerted attempt to erode standards, and disciplinary and grievance processes were open to erosion like everything else. It would be helpful to all sides of the political debate.

Philip Hammond: The hon. Gentleman is asking one question that is easy and one that is difficult to answer. The easier question is whether people who are employees have certain minimum standards of protection, and the answer is clearly yes. There is consensus on that issue. The more difficult question is where is the boundary. When the hon. Gentleman talks about people in the workplace who have the characteristics of an employee, we may be in some difficulty.
 I said during the National Minimum Wage Bill debates that having been a self-employed person, I am acutely aware that the body with the greatest and most penetrating interest in where the division lies is the Inland Revenue. It was difficult for Ministers during the passage of that Bill to argue that a person whom the Inland Revenue was prepared to regard as a self-employed contractor was, for the purposes of that Bill, more akin to an employee. I know from experience that the Inland Revenue is fairly aggressive in seeking to define out self-employed people if it thinks that they have the characteristics of being employed. The Inland Revenue has a fairly long checklist that one is supposed to use to test whether the relationship is one between employee and employer or pertains to a self-employed contractor. 
 My starting point would be that of the Inland Revenue, which has clear fiscal self-interest in defining people as employed. If it concludes that a person is self-employed, it would be difficult for the Minister or the hon. Member for Manchester, Central to argue that he should be treated as an employee. IR35 notwithstanding, the Inland Revenue has sought to extend that boundary for reasons related to national insurance contributions.

Mark Prisk: For people who are earning a living to have the best standards, the challenge must be to improve best practice, not seek more legal processes. The Industrial Society says:
 ''The best means of ensuring management improves its performance is to promote awareness of the cost benefits of good management and to provide guidance on good practice especially among small employers.'' 
Does my hon. Friend agree that promoting best practice is often the better way?

Philip Hammond: My hon. Friend makes a good point that applies across the piece. On Second Reading, the Secretary of State told us that business should not worry about the new procedures because they would be good for business, despite the fact that they resembled burdens. That is patronising. It is incumbent on government to persuade. I am sure that my hon. Friend the Member for Hertford and Stortford (Mr. Prisk), who has knowledge of small business, will agree that changes in management practice beneficial to employers and employees create a win-win situation. The Industrial Society is dedicated to promoting those changes and we welcome that.

Joe Benton: I have gone on at some length—

Ian Pearson: Yes.

Philip Hammond: It is disappointing to hear the Government Whip say ''Yes'' in such a grudging tone when I make self-deprecating remarks.
 I say to the hon. Member for Manchester, Central that we have started the debate on a sensible basis and that I look forward to furthering it without relying on the dogmatic positions that have characterised debate in the past. I hope that we can find a solution that deals with the mischief of employees being otherwise categorised for dishonourable purposes. Furthermore, I hope that we can do so without creating inflexibility in the economy, which I have experienced elsewhere in Europe. I shall withdraw the amendment so that we may debate that later.

Alan Johnson: My very good and hon. Friend the Member for Dudley, South (Mr. Pearson) was being mean-spirited. That is a prerequisite of working in the Whips Office, so we do not blame him for that. It was an interesting debate. For a moment, I thought that if we could lock the doors and carry out the review of employee versus worker, we could reach a good settlement. Unfortunately, we cannot.
 The hon. Member for Runnymede and Weybridge will be aware that the law of contracts predates the Inland Revenue, and taxation itself, by several centuries. The Inland Revenue is not going to help us in that area. My hon. Friend the Member for Manchester, Central raised a crucial issue in relation to the grievances and discipline procedure. Previously, groups of workers have been treated like second-class citizens in the workplace. This applies to both sides. My former union categorised part-time workers as class B members. Full-timers were class A; that is a message about how much those workers were valued.

Philip Hammond: As the Minister is talking about the recategorisation of workers, perhaps he would like to say something about the Post Office's proposal that some of its employees should become self-employed if they wish to remain in service.

Alan Johnson: No, I would not like to, though I am tempted. It has nothing to do with amendment No. 79.
 I was interested to hear the hon. Member for Runnymede and Weybridge say that workers should have basic minimum standards of protection; that is certainly progress on the previous approach from Conservative Ministers and Opposition spokespeople. My hon. Friend the Member for Manchester, Central raised the important point that if we agree that people in the workplace should have recourse to airing grievances and resolving discipline cases because it makes them feel valued as part of the work force, we must ensure that we do not exclude certain groups. 
 We are making this provision on the basis of a review that has not yet taken place. An important facet of that review must be where and how those currently categorised as workers, not employees, who are therefore not covered by some of the provisions set out in schedule 3, deal with a grievance. How does a discipline case apply to them? That is why the Secretary of State has made this provision to ensure that we can feed the review's conclusions into the basic three-step procedure.

Mark Simmonds: Will the Minister mirror the review's conclusions in the regulations or will he make a decision based on its conclusions?

Alan Johnson: I have given an assurance that we will do nothing before the outcome of the review. Where that review goes and how we deal with it is a matter for another debate. That would come under the Employment Relations Act 1999 rather than the Bill. The hon. Member for Runnymede and Weybridge raises an important point. We have had a fascinating debate on a matter to which we shall probably return at a later stage. I am pleased that the hon. Gentleman has agreed to withdraw his amendments. We can proceed on that basis with my categorical assurance that I will not pre-empt the review's outcome.

Joe Benton: I take it that the hon. Member for Runnymede and Weybridge still wishes to withdraw the amendment.

Philip Hammond: I am sorry, Mr. Benton. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Philip Hammond: I beg to move amendment No. 45, in page 35, line 18, at end add
''and any other organisation representing persons appearing to the Secretary of State to be likely to be affected by the order.''.
 On reflection, I am not entirely sure that I agree with the Minister's assertion that the law of contract predates taxation. That would be pushing it a bit. It takes us into another philosophical debate that goes back about 10 centuries. 
 Amendment No. 45 is simple and in line with the previous amendment. It would require the Secretary of State, before making an order under clause 29, to consult not only ACAS, but those representing persons or classes of persons likely to be affected by the order. In practice, that would be employers' organisations, tribunals user groups, and so on. I suggest to the Minister that, in the spirit of openness and consultation in framing secondary legislation, that is entirely reasonable. 
 If we are to depend increasingly on secondary legislation, as apparently we are, there must be a process of consultation with outside bodies. When a Bill receives its Second Reading, outside organisations are galvanised into sending briefings to Members. By and large, regulations do not provoke the same awareness and interest outside this place. Admittedly, even Bills do not always provoke the awareness that they should. In the past two weeks, I have spoken to two senior governing members of one of the country's major employers' organisations, neither of whom was aware of the proposal to introduce extended statutory maternity leave, which is in the Bill, although their organisation has said that it will accept the proposal. We have a problem with awareness among people outside the House who might have useful and important views to put forward. 
 That problem is even worse when it comes to regulations and secondary legislation because of the lower profile. Therefore, the Secretary of State should be obliged to consult those whom it appears to him would be likely to be affected. That is not terribly onerous or prescriptive. Indeed, I am picking my words from my memory of—I think—the Care Standards Act 2000, in which the relevant State of State was comfortable with the concept of having to consult those who would be affected by the order before making it. The Secretary of State does not have to follow their recommendations, but we believe that he should consult them as well as ACAS before introducing proposals. That is reasonable, sensible and in the spirit of conciliatory employment relations. It recognises that ACAS is not the only player on the field.

Alan Johnson: I am sorry to tell the hon. Gentleman that I will resist the amendment, although I understand the logic behind it. We consulted widely on the proposals and the three-step procedure, and it is rather depressing to hear his comments. The statutory procedures represent a major innovation. This is the first time that such procedures have been set out in statute, and we recognise that we may need to amend them in future.

Philip Hammond: The Minister is making my case for me. He just said that he consulted widely on the procedures in the Bill. I am objecting to him having the ability to amend them without consulting widely again.

Alan Johnson: I wish that the hon. Gentleman would be patient and let me finish the various points that I have to make. It was important to make it clear that there was wide consultation before we set the three-step procedure in legislation. It is important also to emphasise the radical change that is taking place. About 900,000 micro businesses will be affected by the change, as well as many small businesses.
 If the Secretary of State wants to change the procedure, he or she would have to consult ACAS before introducing an order. ACAS has unparalleled knowledge of employment relations practices. Its views and procedures are always instructive and rooted in its wide experience of workplace behaviour. I am not suggesting that the hon. Gentleman is saying that there is anything wrong with that, but he is suggesting that the Secretary of State should consult more widely on every change. As a general rule, I would expect the Government to consult other organisations as well when exercising the powers. That would certainly be the case if major changes to the procedures were envisaged. However, the amendment would require us, unnecessarily, to undertake such consultation on each and every occasion that changes were made. Consulting business about minor drafting changes would impose an unnecessary burden, to coin a phrase. We wish to avoid consultation overload—that is an expression that we can all understand. 
 We also have practical problems with the broad-ranging wording used in the amendment, which requires us to consult any organisation that represents people ''likely to be affected.'' Our intention is to undertake consultations with as many affected groups as we can identify. However, many thousands of organisations—large and small, national and local—could fall into the category. 
 Any Government would almost certainly fail to meet a statutory consultative requirement such as the one in the amendment. In principle, there is nothing wrong with the suggestion that we should consult widely, particularly if major changes are taking place. We will always consult ACAS, which has representatives from business and a variety of groups and organisations. However, we do not feel that the amendment helps at all; instead, it would create problems. With those assurances, I ask the hon. Gentleman to withdraw his amendment.

Philip Hammond: The Minister spoke about consultation overload. The Opposition are more concerned about legislative overload. If he would address that, consultation overload would take care of itself.
 The Minister quoted selectively from our probing amendment. Its purpose is not to require the Secretary of State to consult every person who might be affected—that would be absurd—but to consult
''any other organisation representing persons appearing to the Secretary of State to be likely to be affected'', 
which is less onerous. I did not expect the Minister to accept the amendment. However, I hoped that he would say that, in practice, his intention would be to undertake appropriate consultation whenever an order was proposed, not only with ACAS but with others. I accept that he cannot consult with every organisation and person, but he should try to get views other than those of ACAS only. 
 Furthermore, consultation should take place before an order is drafted, not when it is a fait accompli. In a completely different area of the brief, I have recently become aware of a statutory instrument that had been drafted in final form and was ready to be laid. It had not been discussed with a major player in the industry, which identified a serious flaw in it. I understand that negotiations are taking place to amend it. We must bring expertise from the outside world into the process at an early stage to avoid badly drafted regulations. 
 The Minister has not assured me that he will consult appropriately whenever a substantive change is proposed. If he were to confirm that, I would be happy to withdraw my amendment.

Alan Johnson: Let me say again that the Government would expect to consult other organisations if major changes to the procedures were envisaged.

Philip Hammond: That invites the question of what is a major change. However, I suspect that we will have to be content for the time being. The amendment has served its immediate purpose of getting the Minister to confirm that consulting ACAS is not an alternative to broader consultation. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Philip Hammond: I do not question the definition of a minimum statutory procedure. However, several briefs supplied to Committee members raise the question of interaction between statutory procedures and the ACAS code. Before the Committee agrees that the clause stand part, the Minister should explain how the statutory procedure and ACAS code will interact.
 The consensus is that the statutory procedure is weaker than the ACAS code, which is as it should be because that procedure provides a minimum acceptable baseline. The explanatory notes were particularly unhelpful on that. The parliamentary Labour party brief, which is occasionally illuminating, states explicitly that the ACAS code will have to be modified to include the statutory procedure. Will the Minister outline the modifications to the ACAS code? Will he also explain how the two systems will work in tandem, given that the statutory procedure relates to employees and the ACAS code relates to workers? How will those difficulties be resolved?
 I am unhappy with the Secretary of State's power in subsection (2)(a) to amend schedule 2 by order. I did not table an amendment because my unhappiness did not arise until after the rise of the House on Tuesday. That power makes a mockery of including the original procedure in the Bill, because the Secretary of State can delete and replace it. He could delete the contents of schedule 2 and replace it with the ACAS code. Some of his hon. Friends may urge him to do so. We must know whether the Minister has such radical intentions. We are considering the minimum statutory procedure in schedule 2, but lurking in clause 29(2)(a) is the power to amend by order the whole procedure. The Minister should be up front about his intentions. If he intends to bow to pressure placed on him and the Secretary of State to go further than schedule 2, or extend it in the direction that I suggested, the Committee must know. Schedule 2 is the procedure intended, which makes me nervous about the powers in subsection (2)(a).

Rob Marris: The hon. Gentleman referred earlier to the risk of sclerosis in industrial relations and the economy. Schedule 2, when the Bill is enacted, will be implied in every contract of employment for every employee. If for reasons unenvisaged in the House or Committee it was found not to work, we would face sclerosis unless the Secretary of State had the power to amend it. It would be quicker for him to use such a power than to go through the procedures of the House.

Philip Hammond: The hon. Gentleman makes an interesting point. The power to change things by diktat is always quicker than the power to change them by persuasion and democratic discussion. It is that balance that we must address. Some of us on the Opposition Benches feel that the tendency over the past four years to include provision for Secretaries of State to amend virtually everything in every Bill is quite dangerous. The hon. Gentleman makes a valid point. If something is not working or circumstances have altered and it is agreed that a change is needed, powers for the Secretary of State are an efficient means to rectify that. Democracy is often the enemy of efficiency and we must ensure that we get the balance right.
 The purpose of raising the issue, and it has not been raised as an amendment, even a probing one, is to invite the Secretary of State to make it clear that he has absolutely no intention of using subsection (2)(a) to make wholesale changes to schedule 2 and that it is a reserve power to deal with minor changes that might be required. Ideally. I should like to hear that the Secretary of State would regard it as morally wrong to use that power to come back with changes to schedule 2 that changed its effect, meaning or impact. It is right to use the powers to make marginal and technical changes, but it would be wrong to use them to change things in a way that is so fundamental that it renders our consideration of the Bill meaningless.

Rob Marris: When the hon. Gentleman responded to me earlier, he talked about the balance between democracy and efficiency. I do not accept that there is one, although there can be a difficulty striking a
 balance between democracy and speed. My understanding is that under the proposed subsection the Secretary of State would make any changes to schedule 2 by order. Perhaps the Committee will forgive me as I am a new Member, but I thought that that meant, since we are on part 3, that the affirmative procedure would have to be used.

Philip Hammond: The hon. Gentleman is right, technically. Changes would be subject to the affirmative procedure. I do not know whether the hon. Gentleman has attended any Standing Committees on a statutory instrument but once he has he will realise that it is not an effective scrutiny process in any meaningful sense. Taking 90 minutes in a Committee Room is not the way to scrutinise any substantive changes in legislation. That method is quick and effective for minor technical and tidying-up amendments or when a problem has arisen and there is a consensus about the solution.
 The Minister would help the Committee a great deal if he could confirm that he will rule out using the power under subsection (2)(a) to perform any dramatic transformation of schedule 2 that would upset outside bodies that have said that they are broadly happy with it. I do not want the Committee's unopposed approval of the clause to sanction a Bill that says on its face, ''We will do X but we reserve a power to change X into Y if the Minister has any intention of doing that.'' I know that the Minister has come under pressure to look at that point. Does he have any plans to use the power to amend schedule 2 to substitute parts of the ACAS code for the schedule?

Tony Lloyd: I am probably doing the Minister a favour by rising now. I doubt whether he will be able to answer those questions before we adjourn. The hon. Gentleman has raised a number of important issues—
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
Adjourned till this day at half-past Two o'clock.